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What’s in Store for Trump and China?

11/15/16 | Rahil Modi | Regular Correspondent

On the Surface

The world’s two economic superpowers, the U.S. and China, are decisively intertwined. When Chinese markets dipped last year, the United States felt the backlash; likewise, Trump’s election last week has implications for China. Trump’s open rejection of free trade, and persistent antagonization of China has left many wondering what’s in store for the two nations.

China to Suffer?

Donald Trump has pledged to impose a 45 percent tariff on Chinese imports, which will surely result increased U.S. retail prices on Chinese goods. Although China could implement steep tariffs in response, their economy is likely to feel the brunt of Trump’s policies. Experts at Daiwa Capital Markets have estimated that, if Trump’s propositions were to be implemented, Chinese exports to the U.S. would decrease by as much as 31 percent and China would face a GDP drop of up to 1.75 percent.

Likelihood and Consequences

The International Monetary Fund projects that Trump’s protectionist policies will sap the global economy in the long-term. Trump will face a decisive choice: fulfill campaign promises potentially jeopardizing U.S.-China relations and the global economy, or take a more moderate position now that he holds the nation’s highest office.